Question

Bombeck Inc. has the following transactions during August of the current year. Aug. 1 Opens an office as a financial advisor, investing $5,000 in cash in exchange for common stock. 4 Pays insurance in advance for 6 months, $1,800 cash. 16 Receives $1,900 from clients for services performed. 27 Pays secretary $1,000 salary. Journalize the transactions. (Credit account titles are automatically indented when the amount is entered. Do not indent manually. Record journal entries in the order presented in the problem. If no entry is required, select "No Entry" for the account titles and enter 0 for the amounts.)

Answer 1

Date Account title and explanation Debit Credit

Aug.1 Cash $5,000

Common stock $5,000

[To record cash in exchange for common stock]

Aug.4 Prepaid insurance $1,800

Cash $1,800

[To record paid insurance in advance]

Aug.16 Cash $1,900

Service revenue $1,900

[To record cash received for services]

Aug.27 Salaries expense $1,000

Cash $1,000

[To record cash paid for salaries]